Hybrid-nanostructure Ag−Zn0.92Co0.08O dilute magnetic semiconductors synthesized by a solvothermal method show that the magnetic property of the nanorods is changed from paramagnetism to room-temperature ferromagnetism when 2% Ag is codoped into Zn0.92Co0.08O nanorods. The detailed analysis of the X-ray absorption fine structure spectra at both Co and Ag K-edge reveals that a substantial part of Ag atoms exists in the tetrahedral interstitial sites of (Zn, Co)O matrix in the Ag(2%)−Zn0.92Co0.08O. We suggest that the interstitial Ag atoms, together with Ag nanoparticles, play a most important role in mediating the high-temperature ferromagnetism of Ag(2%)−Zn0.92Co0.08O, due to the strong hybridization between the Co 3d states and the spin-split impurity band at the Fermi level.